Thursday, August 14, 2008

The economics of efficient legal services

Law firms, with their billable hour model, are understandably reluctant to adopt technologies that could increase their efficiency. An increase in efficiency would mean an associated decrease in billable hours, and thus a decrease in revenue.

But this is an overly simplistic view of efficiency in the law firm that misses the associated decrease in costs associated with an increase in efficiency.

For example: billing clients for routine clerical tasks performed by support staff is either difficult (at best), or simply forbidden by the client. The logic, from a client point of view, is clear. If lawyers are going to charge upwards of $300/hour for their time, it had better include their overhead costs, such as routine clerical tasks performed by support staff. Or even non-routine "clerical" tasks (is the creation of an Affidavit of Documents truly "routine" and "clerical"?)

Therefore, by targeting "overhead" costs for increases in efficiency, lawyers can reduce costs for both themselves, and their clients. And one of the best ways to be efficient is to make smart use of technology.

Using technology to increase your efficiency is not about reducing the profitability of your firm. It's about decreasing your costs and making yourself more competitive - and significant gains can often be achieved with just the software you have already.

Because when it comes to technology, it's not what you use, it's how you use it.

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